Small Business Saturday & How It Impacts Your Local Economy

It’s easier to see your dollars make a difference if you shop locally. This is the sentiment behind the Shop Small campaign, launched by American Express with the inauguration of Small Business Saturday on November 27, 2010. The Saturday after Thanksgiving, consumers are encouraged to support local companies to kickoff the holiday shopping season.

While large corporations tend to make the headlines for job creation, you may be surprised to discover just how much opportunity the little local companies create. For example, small businesses accounted for 60% of the net new jobs created since the end of the recession, according to Small Business Association and Bureau of Labor statistics.

Familiar faces, transportation savings and a healthier economy are some of the many reasons to shop local this holiday season.

People Over Profit

Although bigger businesses can often offer a cheaper price and the convenience of a one-stop shop for your gift list, it’s hard to beat the relational experience of supporting your local business owners.

“Profit with a premium paid to customer service is not usually seen in chains, which so rarely responds to the cries, desires, and needs of the community,” commented Josh Nathan, Professor of Critical Thinking & Communication at The Art Institute of Colorado, in a brief interview. “These types of local businesses respond in ways that engender intrinsically motivated support despite possibly higher costs. The less overt focus on the bottom line is often what makes these businesses stand tall, even in an age when profit margins are slim.”

For Roberta Perry, founder of Scrubz Body Scrub, Inc., says, “There is nothing like walking into a store in town and seeing by the expression on the shopkeeper’s face that you are wanted and loved as a customer. They anticipate your wants and needs before you even have to ask,” shared Perry. “Or they go out of their way to get something for you if they don’t have it at their shop. Or they stay open late, just for you.”

Perry practices what she preaches and doesn’t just rely on her customers to support local businesses, but actively shops small herself. “I do this for my own customers, so I make it my business to give local shops the same love,” related Perry. “It is all about relationship building, and the ROI (Return On Investment) is tremendous. You build a cadre of brand ambassadors, as opposed to just customers.”

Close to Home

David Head, co-founder of DesignLive.co, believes that community engagement is essential to a small company’s success. “Being involved in a community helps you to know your customers more than money ever will. Knowing your customers is the only way to create a product that they love,” he said.

According to Kristen Fusaro-Pizzo, founder and owner of Bath, Body, and Candle Moments, the American Dream is the main motivation to shop small. “Small businesses are usually owned by individuals or families who work tirelessly to get their businesses up and running. These people are your neighbors who have had dreams and visions of adding something to the world,” shared Fusaro-Pizzo.

“They are employing your friends and family, and maintaining a healthy community of commerce. Local businesses are far more likely to donate to their local community, driving the value of the local economy higher. Nationally, local businesses make up nearly 65% of jobs, and the more empowered small businesses are, the more they can hire. Small businesses don’t usually take their work overseas, driving the national economy higher.”

Many communities get creative in their efforts to encourage citizens to shop small the Saturday after Thanksgiving. The Berrien County Chamber of Commerce in Georgia offers small business customers the opportunity to win $100 in Berrien Bucks if they enter their product receipts in the local drawing. Berrien Bucks can be spent at almost all of stores within Berrien County, said the Chamber of Commerce, as the stores will be reimbursed for the Berrien Bucks spent. “Small business is the backbone of local communities,” reported the chamber press.

Building a Better Economy

Higher income growth and lower levels of poverty are characteristic of areas with a higher number of locally owned businesses. A study by the Federal Reserve Bank of Atlanta discovered that counties with a greater percentage of small businesses also had stronger local economies. For every $100 spent at a small business, approximately $70 stays within the local economy, while only $43 remains in the community when the same amount is spent at a non-locally owned business.

The experience of Jeff Street, COO of Boss Heating and Air Conditioning Inc., illustrates the important role small businesses play in the local and national economies. According to Street, small businesses “bridge the gap that national chain companies can’t.” The type of void that local companies fill varies depending on the industry. “For retail goods it might be the purchase and sale of local items,” said Street. “For our specific industry, multiple small businesses in the area create more jobs than having just a few large chains.”

While big corporations typically use their own supply chain and distribution, Street found that having multiple heating, ventilation and air conditioning (HVAC) businesses in his area actually attracted two more supply distributors, which brought more jobs to the region. “Additionally, having multiple small businesses creates more jobs, not just in HVAC supply and distribution, but in service and installation.”

Shop Small Every Day

As awareness of Small Business Saturday continues to grow, so does consumer turnout. The number of customers shopping small grew 8% from 2014 to 2015, to over 95 million shoppers, reported the Small Business Saturday Consumer Insights Survey, released by the National Federation of Independent Business (NFIB) and American Express. However, many small businesses are still waiting to feel the effect of the shop local campaign. “We personally do not see any impact from Small Business Saturday,” says small business owner Ben Freedland of ZINK, an artisanal handcrafts store in Austin, Texas. “Shopping local is something residents do every day.” Small Business Saturday is a good reminder to shop local not just during the holiday season, but every day.

“Small Business Saturday is a fun event,” shared Mark Aselstine, founder of Uncorked Ventures from the San Francisco Bay Area. “It ends up being a reminder that what we have is actually pretty unique.”

As Street shared, “Using a local small business gives people peace of mind, knowing they are contributing to their local economy.” Choose to check off your holiday gift list the Saturday after Thanksgiving by looking local and shopping small. Get to know the little guys making a difference in your local economy and look for small businesses near you.

Subscribe to Zing! blog

Want to impress your friends and family with the knowledge we'll drop on ya?
If so, subscribe now for tips on home, money, and life delivered straight to your inbox.